DFW Economy

[tamtagon]

The future state of Ross Avenue is as revolutionary as it has ever been. Past live were chock full of dingy dirty warehouses, slimy used car dealerships, whorehouses, a silk stocking row of the finest homes in North Texas, an undesirable neighborhood that sheltered the beginnings of the North Texas gay scene. Ross Avenue lived as the "Uptown" of the past where the most expensive rents budded off the Central Business District. The Arts District is turning that whole downtown area into a completely new type of city neighborhood, a world city.

All that social and cultural change will continue for at least another generation as Ross Avenue is refocused again with Shraman South Asian Museum, Headington, and Spire. We've discussed for a few years now the conditions, amenities and quality of life along McKinney Avenue. We'll have similar discussions about Ross as the inevitable repair to the streetscape comes on line.

The walk from the Texas Book Depository to the Latino Cultural Center will be the guide to municipal grooming of Ross Avenue. If not because it's the right thing for a community to do, then because that's the foundation of a powerful 'economic engine.'

[DPatel304]

By the way, when I was talking about Ross Ave, I was specifically talking about the portion of Ross Ave. to the east of the CBD.

[tamtagon]

I guess we've seen this emerge for some time now, but can it be said that 'logistics' is to Dallas as oil is to Houston? What was once marketed as the Dallas Inland Port (among other names!) is thriving.

One Los Angeles/Long Beach Port logistics company pioneered in South Dallas County with the Dallas Intermodal Port and after a decade of whatever-you-want-to-call-it, another LA/LBC logistic company is taking over, calling it Southport Logistics Park. I missed that Xebec relocated it's HQ to Dallas.

Alliance is no joke! NAFTA and Perot made that happen and it's a globally acknowledged operation now; some may believe political wheel-greasing kept the South Dallas initiative hibernating while Alliance laid it's foundation, but the regional economy clearly supports two largest scale cargo shuffling operations, and not to be forgotten is DFW Airport.

Very compelling.

[tamtagon]

I guess we've seen this emerge for some time now, but can it be said that 'logistics' is to Dallas as oil is to Houston?
...
Very compelling.

ummmmm, unless politics hamstrings the state's economy:

https://www.dallasnews.com/business/tra ... -trade-war

Payback from China and other countries to Trump's trade actions now covers billions of dollars' worth of Texas exports, according to data collected by the U.S. Census Bureau. That hit, focused on the ag and energy industries, appears to be greater than what's being felt in any other U.S. state.

Texas has likewise borne the brunt of Trump's steel and aluminum tariffs. The state would also feel a keen impact if the U.S. ends up imposing levies on imported cars or if China follows through on a pledge to slap duties on crude oil, petrochemicals and other Texas stalwarts.

No corner of the Texas economy is likely to go untouched.

...Many Texas farmers are trying to stay optimistic, especially since Trump has promised to protect a community he talks about with near-reverence.
..."There are limitations to what China will be able to do, in part because China has a lot more to lose," said Scott Paul, president of the Alliance for American Manufacturing and a supporter of Trump's trade approach.

In all the turbulence and turmoil, someone will find a way to make tons of money off the media hyped trade war.

[Cord1936]

You know the Dallas area economy is absolutely SIZZLING RED HOT when you have 1,000,000 square feet of retail space being dumped back onto the market yet at the same time the demand is so great that our 2Q18 retail occupancy rate INCREASES and comes close to setting a new all-time high!

AMAZING!!!

Sears And Toys-R-Us Emptying 1M SF In DFW, But New Anchors Push To Near-Record Q2 Retail Occupancy
By Catie Dixon, Managing Editor, Dallas BisNow, July 05, 2018

While the U.S. had its worst quarter of retail absorption since the recession, Dallas came close to setting a new occupancy record.

Retail occupancy edged up in Q2 to 92.5%, the second-highest rate in 30 years, just behind the 92.7% occupancy at year-end 2016.

That number is a little surprising considering the 1M SF of vacancy hitting the market from Sears and Toys R Us closings alone (which are hurting occupancies nationwide), but big box-space has been backfilling nicely, Weitzman data shows.

"The market has been able to maintain steady occupancy in the face of some major store closings because the closures are being largely offset by pre-leased new construction and the backfilling of large vacancies," Weitzman's Q2 report said.
...
Construction is still churning strong in DFW, and Weitzman predicts deliveries in 2018 will mirror the 4.1M SF that delivered last year.
...
Weitzman has tracked 3.5M SF of retail underway or with announced openings this year, which will push DFW's retail inventory over 200M SF for the first time. And that isn't anything to worry about.

"The outlook for the DFW retail market in 2018 and going into 2019 remains strongly positive as retail is supported by growth in the key areas of population, job gains and single- and multifamily housing deliveries," Weitzman said.

Article: https://www.bisnow.com/dallas-ft-worth/news/retail/sears-and-toys-r-us-emptying-1m-sf-in-dfw-but-new-anchors-push-to-near-record-q2-retail-occupancy-90318?be=dallasdecodence%40aol.com&email=dallasdecodence%40aol.com&utm_source=MorningBrief&utm_medium=email&utm_campaign=20180706_dallas-ft-worth_morningbrief

[cowboyeagle05]

There is always someone who wants a piece of the DFW pie even if they don't last long enough to see their profits ever rise to the level of some of our long-term retail giants.

[Cord1936]

PMRG Q2 Report: DFW Office Market Still Strong
By Kerry Curry, July 26, 2018, Dallas Bisnow

With a humming North Texas economy as the backdrop, the DFW office market concluded the second quarter with 329K SF of direct net absorption, its 28th consecutive quarter of leasing gains, according to PMRG’s Q2 Dallas-Fort Worth Office Market report.

Year-to-date [net] absorption increased to approximately 1.3M SF, according to the report.
...
Absorption in subsequent quarters should get a boost from several significant lease signings during Q2, including Samsung Electronics (216K SF), Darling Ingredients (95K SF), Genpact (95K SF) and GAINSCO Insurance (87K SF).
...
The DFW region should continue its expansionary phase through the second half of 2018, barring an unforeseen national recession or negative geo-political event.

The region’s strong employment and population growth, diversified economy and low costs of doing business should lead to above-average performance, according to PMRG Research. Among the metropolitan markets with a workforce over 1 million, the DFW Metroplex ranks first in annual employment gains, ahead of New York-Newark-New Jersey.

Article: https://www.bisnow.com/dallas-ft-worth/news/office/pmrg-q2-report-dfw-office-market-still-strong-91099?utm_source=CopyShare&utm_medium=Browser&be=dallasdecodence%40aol.com&email=dallasdecodence%40aol.com&utm_source=MorningBrief&utm_medium=email&utm_campaign=20180727_dallas-ft-worth_morningbrief

[Cord1936]

Meanwhile, in the tale of two cities:

50 Million Square Feet Vacant in Houston: Worst Vacancy Rate in 30+ Years, NAI Reports
HOUSTON, By Ralph Bivins, Realty News Report, 07-31-18

Key excerpts:

* 50 MSF vacant in Houston, worst office vacancy in over 30 years,

* Houston seeing historically high vacancy with continued negative absorption including ongoing large-scale lease dispositions and an occupancy rate at its lowest level in 30+ years,

* No silver bullet to bring a timely healing as energy companies, backbone of Houston office tenants for almost a century, continue to remain stagnant and many are shedding space

* It’s been so long since Houston scored a major league win in the corporate relocation game, it’s hard to hold hope that economic development can do anything substantive about Houston’s vacancy problem.

* JLL reports leasing demand is “stagnant.” Houston has lost ground in 2018, with 2.4 million SF in negative absorption year-to-date, JLL says.

* Vacancy rate will grow even greater in coming year with no end in sight

Article: http://realtynewsreport.com/2018/07/31/50-million-square-feet-vacant-in-houston-worst-vacancy-rate-in-30-years-nai-reports/

[DPatel304]

* It’s been so long since Houston scored a major league win in the corporate relocation game, it’s hard to hold hope that economic development can do anything substantive about Houston’s vacancy problem.

Is this referring to the entire Metropolitan area, or just Houston proper? I'm not as familiar with Houston, so I wasn't sure if they had something similar to Plano that was getting a lot of relocations.

[Cord1936]

LendingTree's recent analysis shows Dallas as the 9th most valuable city in America according to residential real estate with a value of $549 billion dollars, equivalent to the entire GDP of Sweden ... Dallas is the only Texas city to make the top 10.

Houston ranked 13th, Austin 24th and San Antonio 32nd.



Full article: https://www.lendingtree.com/home/most-valuable-cities/

[Matt777]

Wow, our real estate is among the most valuable in the nation, and we have one of the highest property tax percentages in the country, but our city still can't pay for police, keep roads in decent condition, beautify, build parks, upkeep schools, really nothing. We need a military coup at city hall.

[Tnexster]

Wow, our real estate is among the most valuable in the nation, and we have one of the highest property tax percentages in the country, but our city still can't pay for police, keep roads in decent condition, beautify, build parks, upkeep schools, really nothing. We need a military coup at city hall.

That's not a unique situation.

[Matt777]

Wow, our real estate is among the most valuable in the nation, and we have one of the highest property tax percentages in the country, but our city still can't pay for police, keep roads in decent condition, beautify, build parks, upkeep schools, really nothing. We need a military coup at city hall.

That's not a unique situation.

All of the cities in the list above have amazing parks, public transit, police/fire departments, and publicly supported cultural institutions...... while collecting a lower property tax percentage. We have none of that, and seem to be struggling to provide even basic services like roads that don’t destroy your car with potholes. It’s gotten so bad.

[texasstar]

Wow, our real estate is among the most valuable in the nation, and we have one of the highest property tax percentages in the country, but our city still can't pay for police, keep roads in decent condition, beautify, build parks, upkeep schools, really nothing. We need a military coup at city hall.

The vast majority of those property taxes are going to school districts, not municipalities.

[I45Tex]

* It’s been so long since Houston scored a major league win in the corporate relocation game, it’s hard to hold hope that economic development can do anything substantive about Houston’s vacancy problem.

Is this referring to the entire Metropolitan area, or just Houston proper? I'm not as familiar with Houston, so I wasn't sure if they had something similar to Plano that was getting a lot of relocations.

Well, no, they don't, not really. Planned community The Woodlands finally got a bunch of office investment in the past 20 years and has landed head offices of Spanish bank BBVA's holding company for the US market, as well as US Oncology and some chemical and energy firms (Anadarko and Huntsman come to mind, but there are others). AonHewitt's branch there has a lot of employees. But that submarket, at 15-16 MMsf, is only half the size of Upper Tollway/Legacy's 31MMsf.

Steadier DFW and stop-start Hou have managed to average out to around the same pace of growth for a few generations now, but this LendingTree data shows DFW residents' household-owned residential property now worth 22% more than Houstonians' comparable total, and it's also possible that 2017 annual metropolitan GDP numbers coming out from the Bureau of Economic Analysis this 18th of September will show DFW pull more than 20% ahead of Houston-Galveston-Sugar Land-Woodlands for the first time since statistics have been kept.

The only significant relos this decade for that area outside of straight-up energy, petrochemicals, or engineering services (that I can think of) have been Mitsubishi Heavy Industries America (oilfield compressors, etc.; only 40 jobs, though), Daikin/Goodman (air conditioner factory, warehouse, and R&D, but 39+ miles northwest of downtown), and Topeka, Kansas' Menninger Clinic, which opened its psychiatric campus in 2012 after moving to Houston in 2003.

As Tnekster noted on our recent subforum thread concerning Hines' groundbreaking for a 47-floor office tower in Downtown Houston... with fifty million square feet of office already vacant... 'there's no shortage of optimism down there'
... but I've seen that optimism extend to the belief that they're highly diversified, and it just gives them too much credit where credit isn't at all yet due.

Sysco food supplies; Waste Management Inc.; a car dealer/collision center company called Group 1; the car and truck distributor Friedkin Group holdings; Academy Sports and Outdoors chains; Fertitta Entertainment; American Nat'l Insurance in Galveston; Insperity in Kingwood; and aforementioned US Oncology and BBVA are basically the entire list of their public or private HQs outside of the energy, chemicals and engineering businesses. Even large healthcare providers based there like MemorialHermann remain far smaller than Dallas rivals Tenet or Baylor Scott & White.

That may give Houston-Galveston a chance to become more regionally distinctive while Dallas becomes more nationally generic -- but, by that very same token, in almost every industry nationwide, DFW economically seems to be an ever more attractive relo site to high performing employees as compared to how attractive Houston is for their industry.

[Cord1936]

^^^^^^^
No shortage of optimism is putting it mildly. Here is a glimpse of what is about to unfold in Houston concerning ever greater office vacancy problems:

Houston Landlords, Brace Yourself: 43 Full Floors of Sublease Office Space Coming Back in the Next 12 Months, Colliers Says
Realty Report News, Houston, TX, Aug. 6, 2018

HOUSTON – (Realty News Report) – Forty-three full floors of sublease office space will be returned to Houston building owners within the next 12 months as the term of the leases expire, according to a new report by Colliers International.

Overall, Houston has 288 full floors of sublease space, with over half of that with five years or more of term remaining, Colliers reported.
...
The Energy Corridor area, Downtown and Westchase have the largest concentrations of sublease space.
...
Article: http://realtynewsreport.com/2018/08/06/houston-landlords-brace-yourself-43-full-floors-of-sublease-office-space-coming-back-in-the-next-12-months-colliers-says/

[cowboyeagle05]

Coworking space...

Someone call WeWork I am sure they would open at least three locations within a block of each other...

[I45Tex]

Here is BEA's new estimate of the largest 2017 metropolitan statistical areas by nominal (current-dollar) annual GDP --


$1,718 billion for greater NY
$1,044 billion for LA-Orange County (a much smaller geography than greater NY, so apples to oranges)
$680 billion in Chicagoland
$535 billion in DFW
$530 billion in DC-VA-MD-WV (not including metro Baltimore)
$501 billion for San Francisco area
$490 billion for Houston-Galveston
$445 billion in Philly-Wilmington (not including Trenton or Reading)
$439 billion in metro Boston
$386 billion in metro Atlanta

San Francisco leaps into third at $776 billion total if Silicon Valley is included in it -- over 2X the tenth-ranked Atlanta metro GDP.



Where the Metroplex does even better, however, is in GDP gain. Here's all American metros that during 2001-2017 (when comparable statistics have been kept) have added >$50 billion per year to their productivity. Could have been even higher if we spent less time here on DallasMetropolis!

NY +274
LA +271
SF&SV +260
DFW +173
Hous +148
DC +129
SeaTac +113
Boston +97
Philly +87
Atlanta +82
Chicago +81
Austin +73
PDX +72
Miami +69
Phoenix +62
San Diego +57
Denver +55
Charlotte +52
San Antonio +51

near misses: Twin Cities +49 and Nashville +47

[Tnexster]

^^^^^^^
No shortage of optimism is putting it mildly. Here is a glimpse of what is about to unfold in Houston concerning ever greater office vacancy problems:

Houston Landlords, Brace Yourself: 43 Full Floors of Sublease Office Space Coming Back in the Next 12 Months, Colliers Says
Realty Report News, Houston, TX, Aug. 6, 2018

HOUSTON – (Realty News Report) – Forty-three full floors of sublease office space will be returned to Houston building owners within the next 12 months as the term of the leases expire, according to a new report by Colliers International.

Overall, Houston has 288 full floors of sublease space, with over half of that with five years or more of term remaining, Colliers reported.
...
The Energy Corridor area, Downtown and Westchase have the largest concentrations of sublease space.
...
Article: http://realtynewsreport.com/2018/08/06/houston-landlords-brace-yourself-43-full-floors-of-sublease-office-space-coming-back-in-the-next-12-months-colliers-says/

Interesting that a brand new 40+ floor tower is planned while the near equivalent is coming back in the next 12 months.